Recent Posts

Categories

Passive income: the key to liberation

Passive income comes with a wide variety of benefits for anyone looking to save up a nest egg or alleviate financial stress. It provides a viable way to free up time. Unlike the majority of income sources, money is not generated simply as an exchange of an individual’s time. Salaries are often calculated based on an hourly rate. Hence, the best income sources generate the most money for least possible time input.

The tradeoff is that the majority of passive sources require an upfront investment of either money or time. Passive income should not be mistaken for a get-rich-quick scheme. It usually comes in the form of a modest stream of revenue that can add value when combined with active income.

Many people dream of earning money while sleeping or relaxing on a beach. Passive income makes it possible but one needs to pick the ideal revenue-generating project to maximize earnings. A good example is rental income from a residential or commercial property. However, the hardest part is setting up the income source and getting the money flowing.

Choosing the ideal source of income provides a sure-fire way to enjoy greater financial freedom. Once multiple streams of revenue are active, the momentum will keep the money flowing. Some income sources require regular maintenance and they are more stable when compared to just one job. Individuals exercise more control over sources of passive income.

One simply needs to decide how much time and effort or financial investment to put in. There is a choice of multiple income streams, which enable an individual to continue working when one source stops. The internet has expanded the number of viable income generating opportunities. To take advantage of the online income streams, an individual needs a computer with an internet connection, time, motivation and patience.

When done correctly, the income stream will free up time for other income generating ventures.

Value creation

Passive revenue is based on the creation of value, which takes considerable effort and time. It may require financial investment. However, it does necessitate perpetual effort, thus a fixed ratio does not apply. There are three basic types of value exchange: selling value, rental value and secondary value. Selling value is straightforward in that one has to offer a product or service in return for money. These can be designer jeans or private jet charter and heart surgery.

However, this approach does not match other income sources because the service or commodity cannot be resold. On the other hand, software or digital goods can be easily duplicated with minimal effort, time and cost. Therefore, they provide an ideal source of passive revenue.

Renting value entails the provision of a service or commodity like going to work or renting a property. The rented item usually avoids or minimizes value degradation. This applies to renting a residential or commercial property, which remains rentable even after a tenant has left. Usage by tenants does cause significant wear and tear but does not diminish the property’s rental value.

Secondary value, on the other hand, involves the creation of new form of value. To create passive income, one needs to advertise potential and proceed to rent or sell it to interested parties. Providing a free newspaper is one way to create secondary value in that it attracts the attention of thousands or millions of readers. This value can be rented to companies willing to grab the attention of readers through advertisements.

Viable passive income sources

Dividend-paying stocks — investing in the stock of profitable businesses allows investors to take a share of the company’s profits. The profits are disbursed in the form of dividends, typically for a pre-determined amount per share of ownership. Viable businesses attract investors because they have excellent financial health. This makes them a good option for long-term investment. The dividends become a source of passive revenue.

Renting out commercial or residential properties — investing in real property is a practical option that has been a staple investment for decades. There is always considerable demand for accommodation, office space and industrial space. Many building owners pay for the mortgage using rental income and earn a reasonable profit.

E-books — publishing e-books creates a passive income that keeps money flowing over long periods. Customers pay per download. Individuals can compose a book on a wide variety of topics.

Advertising — blogs, websites, online magazines and print-based newspapers can be used to earn advertisement revenue. A web platform or print-based newspaper that attracts thousands or millions of readers can create a good source of income. Advertising networks like Google Adsense allow publishers to display banners on websites. The revenue is paid per click.

Apps — skilled programmers and amateurs can create useful apps and publish them via the Google Play Store and Apple’s App Store. Amateurs can use app creator tools, but the final product may not match the applications created by experienced programmers.

Passive income ideas are really unlimited and they depend on your skills and your particular style for business.